Mezzetti, Claudio; Renou, Ludovic - Department of Economics, Faculty of Business and Economics - 2012
We study the gains from trade in a model with endogenously variable markups. We show that the pro-competitive gains from trade are large if the economy is characterized by (i) extensive misallocation, i.e., large ineciencies associated with markups, and (ii) a weak pattern of cross-country...